Infosys, HDFC :Q3FY12 Result Update: EMKAY

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Infosys Limited

Reco: ACCUMULATE

CMP: Rs 2589

Target Price: Rs 2850

Inline show, guidance disappoints

·      Infy’s Dec’11 qtr op performance came in line. While rev  at US$ 1,806 mn  met expectations, margins improved by ~260 bps QoQ to 33.7% ( Emkay est of ~250 bps QoQ increase)

·      Vol growth at 3% QoQ while pricing improved by ~0.8% QoQ in c.c terms. New logo wins strong, however growth within top clients drags ( top 1/5 rev down by ~8%/2.4% QoQ

·      Disappointed by the co’s flattish revenue guidance for March’11 qtr at US$ 1,806-1,810 mn. FY13 revenue guidance lowered to 16.4% YoY growth V/s 17-19% earlier

·      Tweak FY13/14E EPS lower by ~2.5/2% to Rs 165/182 driven by mgnl cuts in rev est. Maintain ACCUMULATE with a TP of Rs 2,850 (V/s Rs 2,900 earlier), given attractive valuations

HDFC Ltd

Reco: HOLD

CMP: Rs 688

Target Price: Rs 700

Results Inline

·      HDFC Q3FY12 results as expected with NII at Rs11.6bn and PAT at Rs9.8bn. Healthy loan growth across all segments and stable spreads (2.3%) were key highlights of the quarter

·      M9FY12 growth in sanctions/disbursements continues to remain healthy at 19% each. For Q3, calculated growth in sanctions / disbursements stood at 19%/16% respectively

·      Asset quality remains comfortable with GNPA at 0.82% (90-days). HDFC carries a cumulative provisioning of Rs15.8bn (1.2% of loans) on its balance sheet.

·      Valuation premium to continue given leadership and superior return ratios. However, our target price of Rs 700 leaves limited room for upside. Maintain HOLD